EUR/JPY Cross Gains Momentum
During the early hours of Thursday’s European trading session, the EUR/JPY exchange rate rose to approximately 185.20. This movement came as the Japanese yen (JPY) weakened against the euro (EUR), largely due to disappointing gross domestic product (GDP) figures from Japan. Traders are now looking ahead to Japan’s National Consumer Price Index (CPI) report set to be released on Friday.
In the second quarter (Q2), Japan’s economic growth was less robust than anticipated, showing a GDP increase of just 0.3%, down from a previous 0.5% growth rate. The market consensus had expected a 0.5% growth. Yoshiki Shinke, a senior economist at Dai-ichi Life Economic Research Institute, noted, “There was concern that the Japanese economy might even slip into negative growth because of rising import prices and supply issues linked to the complex situation in Iran.”
Despite these challenges, there’s a rising belief in the market that the Bank of Japan (BOJ) might raise interest rates as soon as September 2026, which could potentially mitigate the yen’s losses. According to Reuters, overnight index swaps are indicating roughly an 80% probability that the BOJ will increase rates at the next policy meeting.
Danske Bank’s Outlook on ECB Rate Hikes
Danske Bank analysts have kept a cautious stance on the future of the tightening cycle, reiterating their expectation for only one more rate hike of 25 basis points from the European Central Bank (ECB). Their outlook suggests that an additional increase might lessen the chances of further policy adjustments.
Technical Analysis: EUR/JPY Maintains Bullish Trend
Looking at the daily chart, the EUR/JPY price remains above the 100-day simple moving average (SMA) and the 20-day Bollinger middle band, indicating a positive short-term outlook and persistent buying interest. The Relative Strength Index (RSI) is sitting around 56.75, which is above the neutral mark of 50, hinting at constructive momentum as the exchange rate stabilizes below recent peaks.
In terms of resistance levels, there’s near-term resistance at the June 17 high of 186.32. The next significant level appears to be around 187.50, which marks the upper boundary of the current range and serves as the next target for buyers.
If prices move downward, the first line of support aligns with the 100-day SMA at 185.10, followed by the middle band of the Bollinger Bands around 184.00. A more pronounced pullback could reveal the August 10 low of 182.70 as a key area, and a drop below the Bollinger Bands could highlight further buying interest if the upward trend is put to the test.
